China Suppliers and Negotiations
We’re talking sourcing in China, pricing strategies, and negotiating with your China suppliers. All coming up in this episode of the Amazon Seller Podcast. If you are around Shanghai let Peter Chiang know by emailing him at: email@example.com
Welcome back to the Amazon Seller podcast. My name is Andy Slamans and I’m joined by a very special guest, Peter Chiang, who’s coming to us all away from Shanghai, China. I met Peter a little over a year ago. I traveled around China for about two weeks with Liran, I believe it was in the month of June 2018. Then saw him again in October 2018 we attended the global sources show in Hong Kong. Just recently in April, had a chance to have dinner with Peter and his wife in Shanghai.
Peter has been selling on Amazon for two years. He’s lived in China. We’ll get into his story, I believe for a little over 10 years. He originally started working in China for some Italian manufacturers and now he is branched off and, runs his own business selling on Amazon. I think Peter is going to have some great tips for us today. Especially around the areas of working with suppliers, sourcing and, pricing. And also, how to potentially get terms.
So that’s often a struggle if you’re just getting into private labeling. You’ll want to know and you’ll want to hear the tips that Peter’s going to share on how he’s been able to work in terms with this supplier. You’ve been in this game for any amount of time, you know that cash flow is king. So you want to try to get the best possible terms that you can.
With that introduction, Peter, thank you so much for joining us all the way from Shanghai. He’s 12 hours difference. Peter, if you can just tell us, give us a little background on yourself, and what brought you to China and how you got onto Amazon.
Peter shares how he got started selling on Amazon: (03:22)
Hi, Andy. Thanks for that very kind introduction and for having me on your podcast. Yeah, I can give you a bit of background about myself. My parents were born in China and, they met in the States, where they got married and I was born in Minneapolis. You might be able to tell from my accent I grew up in Australia. I did all my schooling in Australia. I studied engineering at university.
Since finishing my studies in Australia, I’ve worked in Hong Kong, Europe and China and various parts of Asia. So I’m on the Amazon side. I’ve, as you said, I’ve been doing the business. I started selling about two years ago. Last year I made, I sold $700,000 only on Amazon. And this year I’m expected to reach over a million.
All right. So, I just, I have to stop you right there cause I’m always amazed at how quickly folks can scale up. So what’s the total time that you’ve been selling on Amazon again, Peter?
Two years. Wow. So you were able to scale up that quickly, then within the first 12 to 14 months to be able to hit those kinds of numbers?
Right, yes. Yeah, I had a fair amount of capital to start with. Probably more than, than some people start with. So that was a big help. And basically, I worked really hard at it and learned it as quickly as I could.
Now, how did you hear about the Amazon opportunity and then, how did you dig in and really started learning just about the private label process?
One of my friends, who I played touch rugby with in Shanghai. He’s a New Zealander. He was selling on Amazon as a part-time gig, but he’d been doing it for a while. He’d been doing for four years and it was doing quite well. And he was always telling me about it and saying, you should try, you should try it. It’s really good. You know, it’s good fun and you can make a bit of extra money.
And eventually one day I said, hey, let’s sit down and show me how you do this. It was really interesting. And just from there, I started an account, then he suggested I do the ASM course. Amazing Selling Machine, I think it’s called. And so I did one of those courses and then from there, I was just searching any information I could get, from YouTube and from podcasts. And your podcast was one of the ones that I, that I liked a lot as well when I started. So yeah, that’s basically how it went.
Wow. That’s awesome. Now does your friend still sell on Amazon?
Yes, he does. And he’s moved to Bali and, he’s gone full time.
Oh, excellent. Oh, that’s really cool. Okay, so you start selling things, things are going well. So tell us how, you know, I know that you, you have really, what I think’s a unique advantage, living there in Shanghai. You know, tell us some, some interesting things that you’ve learned along the way when it comes to working with suppliers.
Yes. Living in China is a huge advantage. I think anyone, would agree with that if they’ve lived in China for and doing the business. You can go to a factory at the drop of a hat, you know, within the same day if you really want to. And getting samples is so much easier. You know, you can request something today and get it tomorrow, so that’s a massive advantage. Some things that could be interesting for people that don’t live in China is, as you were saying before, I’ve had some interesting experience regarding pricing and getting terms. So maybe I can share some of my experience with those two things.
Peter shares his approach to getting better prices: (07:10)
For pricing, I had an interesting experience. I think there are three main channels people use when they first get pricing for a product. They’ll either go to Alibaba, I’ll use a sourcing agent or allow me to a factory at a fair. So I, when I started, I used a sourcing agent and I always assumed that the price the sourcing agent got me would have been the best price I could get. So because this sourcing agent is Chinese and it was introduced by a friend and you know, I just assumed that I wouldn’t get a better price at them than through the sourcing agent. And the sourcing agent was helping me to do a lot of, a lot of the work as well, the quality checks, et cetera.
Then at the last Canton fair, which was in April, I was looking, I was getting information on a new product that I’m working on. And while I was in the books, I saw some of my existing products. So just out of curiosity, it was that I was asking them the pricing. And come to be that all of these people that I was talking to, all these factories I was talking to, they had lower prices.
And so that triggered something, and I thought, I need to look into this more. What I did to sort of, I thought lower pricing is one thing but lower pricing at good quality, that’s another. So I was asking them, do you sell to any Amazon suppliers any Amazon sellers? And some of them said they did. And I asked which ones and one really got my interest is he was supplying the number one seller of one of my products. So I knew from the reviews of that number one seller that he never had any issues with a product approach, which was, the problem I had occasionally, not very often. So for sure that was good quality.
And, he showed me photos of this brand in his factory and I thought, yeah, that’s cool. He could be faking it. So I arranged a week later to go to his factory and sure enough, he had hundreds, perhaps thousands of these products with this brand on. So I knew that was, that was a genuine supplier. And yeah, so, I’ve been in contact with them. I’ve been there two times or three times already. I’m going back again tomorrow to do a quality check and the price is actually way, way lower than what I was getting before.
So wow, that was a big revelation. And yeah, so I think the tip here is you’ve just gotta keep checking for pricing. You’ve gotta just keep checking, keep looking around. You never know if you can find something that’s better.
Andy shares the advantages of going to the Canton Fair: (09:48)
And I think you know, what you shared, there are a couple of things, a couple of takeaways. One of the advantages of going to the Canton Fair. Because a lot of times you can see a number of suppliers that probably supply similar products to what you sell if you’re selling already.
And then the second thing is, I think that’s a great question to ask suppliers when you’re talking to them. Do they already sell the Amazon sellers? And you can do that as you did obviously in person at the Canton Fair. You can also do that in Ali Baba. You know, when you’re talking to a sales rep, you can ask them. And some may not be willing to share the brands, but some may actually share the brands that they already sell to.
And, and then the third thing I think is interesting is the supplier had photos of the product. Now, as you said earlier, you know, the ultimate way is to either, you know, go to the factory as you did or have somebody else go. To see if they’re actually producing that brand if they have multiple units of that brand. But what a great way to vet a potential factory, by seeing the type of quality products they may already produce, right?
Exactly. Yeah, definitely.
Peter’s take on why some factories don’t attend the Canton Fair: (11:04)
Also while we’re talking about fairs, there’s um, something else that, that you and I discussed when we met – Canton Fair is great, there’s everything is there. Lots of, factories are there. But I’ve discovered that there are potentially good suppliers that go to other fairs and they don’t want to go to the Canton Fair because for them it’s too expensive cause it’s very, very expensive for anyone to display there.
So, there are many other fairs that are not aimed specifically at foreign people, which Canton Fair is. It’s aimed at non-Chinese. But, there are a few websites you can go to and it shows you all the different sectors and different cities. You can do filters. So example, if I’m searching for something in Sporting, I can, in the sporting goods I can just use the filter sport and even just look at Shanghai and see what’s going there. And you can find potentially very good suppliers there as well.
But, one of the downsides is that as they are not geared to do with foreign, sometimes you may have to bring a translator if you don’t speak Chinese. So if you happen to travel to China or you know, someone that lives in China, you can look up when these fairs are and check out for your sector or your category.
Yeah, I mean that that’s a great pro tip. You know, as you said, when you go to Canton, you are going to run into a lot of other Amazon sellers. In the US, we have a trade show, it’s called ASD and probably 15 years ago it was like, it was terrific. You know, if you are selling on Amazon and you source there because there were very few Amazon sellers.
However, now you go there, you’re bumping into all kinds of folks who do more wholesale, you know. The real gold mine is going to smaller trade shows that are probably less well known. And you can find better opportunities. So I think that’s kind of what you’re saying too, that there’s probably hundreds or even thousands of other smaller ones that could have potential opportunities.
Yup, exactly. Yeah.
Peter shares his strategies of how he sets up terms: (13:16)
So, as you said, this is one of the real issues for sellers is cashflow. I have the same problem that can hinder your growth and it’s just a big challenge. And getting terms can be one of the things that helps a lot with the cashflow. I know you guys have talked about terms and cashflow on your show before.
So I first started to request terms after about a year of working with suppliers. I said, hey, I need to ask for a favor, can you give me 30 days terms? And I was flat down rejected. And I was really surprised. I thought you know, why are they not giving me terms? Because I’ve been working with them for a while. I give them a very good volume. And, I realized that it was too big of a jump from going from the standard 30 order, 70 before shipment to go straight to 30 days terms.
So I went back to these factories and I asked them, I said, hey, then, if we can’t do 30 days, a hundred percent terms, how about we start 10%, at order, 90% before shipment. And they agreed very easily to that. I let that go for a while and I thought if I go step by step and let them feel more comfortable, then the chances are higher. So I did that.
I let that run for a few months and then, I went back to them and said, hey, this has been going well. Let’s try 70% at shipments, so zero-order, 70% at shipment, and then 30% after 30 days. And they all agreed immediately. And then after some time, I was able to bring that to 30 days, 100%. So instead of just going straight up, I think a lot of these factories will think that’s too much of a risk. And if you go step by step, you might improve your chances.
Wow. Yeah, that’s, that’s really, really good information. You know, Liran actually did something similar to one of his suppliers. Now he’s got it worked out where basically he doesn’t have to pay him until after the product arrives. He still has like 60 days. You know what, as you said, he’s worked with this supplier now for two and a half years. And he’s ordered a ton of products that they’ve kind of built up that long term relationship and trust.
When we went to China, the very first time that I met you, Liran spent two or three days with the supplier. And so I think he was able to really build a trusting foundation with that supplier. But yeah, I love that idea of, of stepping up.
Peter explains why the trust factor is important when setting up terms: (16:15)
Yeah, for sure. For sure, you’ve got to build up the trust. There’s no way that a factory will give you terms without, without the trust factor. And I think there are, two things you’ve got to keep in mind as well is for a factory, it’s the risk and it’s their cash flow. So if, if they don’t have the cash flow to be able to give you terms, then no matter how good your relationship is, probably don’t wanna give you terms. And, but if they do, if they are able to handle the cash flow, then it’s just a matter of, how much we stay willing to take. And then, that’s a matter of trust that you’ve got to build up, as you said.
All right. That’s awesome.